Mitchell County farmland up in value

The results of statewide survey released last week by the Realtors Land Institute shows that the value of farmland in Iowa increased by 6.6 percent in the past six months. The increase continues a trend shown in previous surveys, although slower than in the previous six months.

Here in the northeast Iowa region, Mitchell County has witnessed the same pattern of increasing land values with a 4.6 percent uptick. Local farmers are seeing strong crop prices and are getting underway on the 2008 harvest.

Across the state, all nine crop reporting districts showed an increase according to Kevin Kolbet. The Osage and Mitchell County realtor noted he has over three decades of farmland brokerage experience and has participated in bi-annual Realtors Land Institute Survey since its inception in 1978.

"Things continue to look extremely strong and positive for our area, "commented Kolbet. He said that our north central Iowa district, which includes Mitchell County, had the second smallest increase in price at 4.6 percent for the last six months. The smallest increase was in East Central Iowa and the largest in Southwest Iowa.

As the survey pointed out and is echoed by Kolbet, land in all categories is in demand, even nontillable pasture and timber.

"There is a niche market for recreational parcels and hunting land as well. Rightfully so," said Kolbet, a licensed farmland broker in both Iowa and Minnesota. "The results for our area are higher than the state averages in all the categories. We are truly blessed with a wonderful natural resource in our fertile soil."

Since 1978, the Iowa Farm & Land Chapter #2 of the Realtors Land Institute has conducted a farmland value survey as of March 1st and September 1st of each year. For each of these 30 years, Kolbet, local Realtor, member of RLI, has participated in these surveys.

This study is separate and independent from a similar survey done annually by Iowa State University which Kolbet also participates in.

The RLI survey breaks the state into nine areas and lists results in each as compared to the ISU one which provides results on a county by county basis. Each rate bare, unimproved land sold for cash in the three categories of "high quality crop land", "medium quality crop land", and "low quality crop land".

The overall results of the RLI survey show a statewide average increase of cropland values of 6.6 percent for the March 1, 2007 to September 1, 2008 period. Combining this 6.6 percent increase reported in March indicates a statewide average increase of 17.6 percent for the year September 1, 2007 to September 1, 2008.

Kolbet discussed that the preferred method for buying and selling land is still done via private treaty. Other bid arrangements or auctions have been tried, but several were not successful due to a minimum bid not being achieved. Kolbet has seen some owners even with low cost basis sell at these price levels, utilize what may be historically favorable capital gain tax treatment, and solidify their retirement years.